Calling all veteran YNABers
I love reading your replies in all threads - a lot of lightbulb moments. So I'm hoping you'll share some of your wisdom and tales of what brought you here: why you started YNAB, big moments you've had since using it, and a tip or two (or three) regarding your favourite features or "hacks" that make it work for you. You're an inspiring bunch!
I'm not a long-time veteran (1.75 years or so for me), but the main reason I tried YNAB was that I got married. I was terrified that I would think a certain set of money was going to cover rent/groceries, and my husband would think the same money was free to spend on something fun at the hardware store (or vice/versa). YNAB is, at it's core for us, a communication tool.
Because it was a separate interface, we were both forced to translate our very different mathematical thinking to the same format/language. This was a good, non-personal way to figure out what our financial responsibilities, situation, goals, and plan would even be (all our frustration at figuring out the common language was directed towards YNAB, and could not be taken personally by either of us. Whereas, our separate spreadsheets not only did not make sense to the other person, it seemed almost a personal affront to question the other's set up in Excel. YNAB was much better at being a neutral ground. We have had no disagreements or quarrels about money so far. I'm glad of that.
We actually simultaneously tried YNAB and Quicken. Quicken fell by the wayside before month 3.
So that's how we got to YNAB, other than the fact that my friend persistently asked if I wanted to try it for about 3 years... Thanks, Friend, if you're reading!
As for tips and tricks, follow the first three rules, start out by budgeting your savings if you want to retain it, read this blog post <https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/> and try to live on last month's income. I attempted to compile everything I knew about that here <https://support.youneedabudget.com/t/m1hqyb3/trying-out-the-ynab-buffer>
I also like the way I handle gift cards, but that forum post is nearly a year old, so I'm not going to go find it now.
The veterans I have learned the most from are dakinemaui (everything, really, but has the best explanations of reimbursements and overdraft accounts that I've seen), nolesrule (helped me realize I should not pay my CC to $0 and why, among other comments that spurred thought), jenmas and HappyDance both have given very clear examples of using YNAB to it's full potential, and WordTenor is good at explaining how YNAB works clearly and concisely while not shying away from it's foundational principals. Patzer wrote the first important thing that I read (very high quality), but I haven't seen him on lately. Superbone , JoeDid , and many others also demonstrate facility with both the long-time method and the current software.
I discovered YNAB and bought my first copy, which was YNAB Pro at the time, in July of 2008. Up until that point, I had never figured out how to budget properly. I had used Quicken for years and years but only to track my money. This time period was just at the end of my crumbling marriage. (So Move Light Sound Life and I are on opposite ends of the spectrum there! 🤣 ) Money was just one of many issues in my marriage. When the dust settled, I had no liquid savings to speak of, I had credit card debt, I had a car loan, and I had 2 mortgages on a house that was $100k underwater (note the year).
Enter YNAB. That turned everything around over time. I’ve gone from YNAB Pro to YNAB 3 to YNAB 4 and finally to what we call nYNAB today. In all the years since, I’ve paid off all debt other than a mortgage on a house I bought a few years ago. I’ve put two sons through college debt free. I paid cash for my current car. I have a full six month emergency fund plus lots more savings on top of that. YNAB has been the tool that unlocked financial freedom for myself.
Tips? Let’s see. My biggest modification is foregoing the new YNAB credit card system in favor of making my credit cards checking accounts. This is only recommended for PIF (Paid In Full) credit card users. It mimics previous YNAB’s CC handling and cuts out the middle man of the CC payment category. I used the new system for about a year but then switched to checking accounts and haven’t looked back. The new system is fine when it works but there are a handful of situations that can cause the payment category to get out of sync. It is unnecessary for a PIF user like myself.
Also, Rule 4 changed with nYNAB. I much preferred the previous Rule 4, Live on Last Month’s Income. This functionality used to be built into the software. Now you have to do a workaround using an Income for Next Month (INM) category. All income this month goes into the category. Once I receive my paychecks for the month, I release these funds back to To Be Budgeted and fund all of next month using the Underfunded Quick Budget option. I then make a pass through and make category adjustments as needed.
One last tip is I use the Running Balance to make sure I have enough in my checking account at all times to cover all of my bills, all of which I have automated. I use scheduled transactions liberally. I get paid fortnightly so I like to see my next two paychecks in my running balance at all times. To do this, I have two scheduled paycheck transactions two weeks apart each with a repetition schedule of every 4 weeks. I leave myself a smallish buffer in checking and then everything else goes into online high yield savings accounts.
YNAB definitely turned things around for us. Lots of consumer debt, which seemed to grow despite thinking we made "enough". We have never Fresh Started, and I sometimes pull up the Net Worth graph for inspiration.
Another veteran who has passed is DeguelloTex. His gruff, terse, tough-love style would never fly on this board, but many of us are better off for his guidance.
I used YNAB in 2011 for awhile to get out of debt (Dave Ramsey baby steps, well, BS1 and BS2), but then I didn't build an emergency fund or buffer, I quit budgeting, and I ended up back in debt again when an emergency happened last year.
This time around I'm using a much more sophisticated software that is certainly much more seamless than what I was using in 2011, so it's become a lot less work to keep up with my budget. I started up again last summer after taking on a massive $25k HEL for my divorce settlement.
The main tips I have are pretty standard:
-Ignore your growing account balances, only look at your category balances BEFORE you make any spending decision
-If you need to WAM (whack a mole, rule 3), do it BEFORE you spend the money.
-Use manual entry combined with automatic transaction downloads (if in USA) so you don't miss a transaction.
-Enter your transactions right away, either at the check out, or as soon as you leave the store, or get into your car, whatever, but this habit is very important to your success IMO
-Be patient and give it at least 3 months to get used to your budget in YNAB and following a budget in general
-Don't be afraid to get help from YNAB tech support, they are great and have been very helpful when I've gotten help through the chat.
-Don't be afraid to try using cash envelopes for your problem categories for a few months while you get the hang of it, especially if you're trying to get out of debt and your budget is tight. But carry hand sanitizer if you do this and sanitize after handing cash...cash is germ filled! (Don't do this if you're at high risk for Covid19)
-Use goals for all the categories you have every month to make your actual budgeting session go very quickly.
-I get paid once a month, but if I got paid every week or two weeks I would do the buffer thing so I can budget the whole month at once. I highly recommend it, but it may take awhile to get there so be patient.
-Always put $ in "Stuff I forgot to budget for", and expect it to run out. I actually use this category to move money to other categories so what I actually ended up spending more money on is tracked correctly.
-Use emoji's in your account names and categories if that makes you smile when you open your budget.
-Also use due dates and payments in category or account names as needed, so the information is always there
-Be creative with your budget organization and make it fit your life. You don't need to stick with their standard category groups and category names that came with YNAB.
-For any type of spending that you are trying to pay more attention so you can cut (or at least spend only mindfully) you should track it in it's own category. For any category that you will spend no matter what, you can try combining them to make your budget more granular and simpler.
-Get off the credit card float ASAP. I feel so much better now that I'm off it. I was always a paid in full credit card user except during my emergency, but I was always on the float. Now I'm so much farther from a financial disaster than I was before.
-Be patient with yourself as you learn to separate account balances from category balances. Many people still want to keep their different savings accounts, like I did, and that's a natural result of not yet trusting yourself to stick to your budget and not being committed to sticking with it long term. When you've stuck to your budget consistently for 6 months or more and you can see yourself doing it for years, then re-think that organization and consider keeping your accounts totally separate from your budget categories.
-On that note, once you get used to YNAB you can work to simplify your accounts so you have less work to do
-As someone else mentioned, reconcile your accounts often and use scheduled transactions with the running balance to make sure your accounts have enough money in them. Move as much to a HYSA as you safely can.
-Some people track their entire net worth in YNAB, but I prefer my budget to be simpler and to only consist of the money that I'm dealing with right now. Do what works for you. I don't even track my mortgage in YNAB, since it'll be paid off in 15 years if I don't pay extra on it. The only debt I have in YNAB is the debt I'm working on crushing right now.
Ok, that was a lot! Glad you're here. The world needs more YNAB right now.
The longer I've been at this, the more I've come to appreciate the methodology. Rule 3 especially, works on so many levels. At first glance, there's less money for something else, and having accurate category balances makes complete sense. However, digging deeper, the psychological aspects are huge, and those benefits come about automatically by choosing to not kick the can down the road. The implicit parallels with behavioral conditioning are unmistakable. (Acknowledge the issue. Is this really an issue? What are the consequences? etc.) Moreover, the process of reallocation (ideally before spending) really cements an understanding of true priorities.
Speaking of priorities, I've seen people apologize for "indulging" in a daily Starbucks run, as if Society shames them. I say if that moment of peace is important to them, and they're OK with the consequence that less is available elsewhere -- thank you Rule 1 -- then they should own it, not apologize for it. Their budget, their priorities.
One trick flies in the face of "conventional" wisdom, and that is the use of CC float. It's not something evil -- it's merely the natural progression out of debt
Interest-bearing debt -> Interest-free debt, a.k.a. float -> debt free / paid-in-full
However, going the other direction can be advantageous. Riding the CC float is effectively an interest-free loan for whatever amount you can consistently make in budgeted purchases each month. Here's a few useful things off the top of my head:
- Accelerate getting to where you can Live on Last Month's Income (pushing all income into next month's area) -- greatly simplifying process and improving clarity
- Reducing other interest-bearing debt -- ride the float on one card (interest-free) and apply the "loan proceeds" to pay down the other card (reducing interest). Bonus points if the card used to float has purchase rewards.
- Floating reimbursements beyond the next due date. (Mind the ceiling on the amount you can safely float.)
- Source of funds for "unexpected expenses" (an emergency fund).
To be clear, I'm not advocating to ride the float forever. You obviously lose the ability to deploy it if you're already riding it, so working back to paid-in-full status should be a priority. At any rate, judicious use of the CC float is just another tool in the drawer. Like any tool, it can make things easier or it can cut you deep. Use it in a safe manner.
Arguably, the most transformational / lightbulb concept, Classic Rule 4:
This "state" is characterized by being able to budget all income received this month in next month's area. While you can switch screens and budget income to next month as it arrives piecemeal (multiple paychecks, spouse income, etc.), most veteran users cognizant of the concept choose to queue up paychecks in a holding category during the month and budget next month's area all in one shot once they've received it all, ideally with only a couple clicks. This holding category is often imaginatively called "Next Month's Income". 😉
This effectively yields a single "effective paycheck" and allows you to budget on a cycle aligned with your expense recurrence -- a huge simplification with vastly increased clarity for anyone with more than a single paycheck per month. This is the essence of Classic Rule 4. Sadly, YNAB doesn't teach this any longer in favor of their Age Of Money gimmick (a backwards-looking spending metric that has zero to do with budgeting).
At any rate, this can also be integrated with a budget "template" or nominal budget values. YNAB teaches the use of Goals for this, but I just keep my template in next month's area. This stays true to the underlying YNAB principle of spending guidance backed by cash in hand, in spite of the at-times over-budgeted nature of next month's area.
This thread has my description of an efficient and safe workflow when following Classic Rule 4 with YNAB:
Feel free to ignore the part about the template if you'd prefer to use Goals. Later in the thread has some comments regarding efficient operation when you can't push all your income into next month's area (the so-called "partially Buffered" case).
Many more insightful comments are made in this thread by Move Light Sound Life and other veterans:
I started using YNAB3 somewhere around 2008, I think. I had changed jobs and taken a pretty hefty cut in salary to get my foot in the door at my choice of employer. My husband and I were looking at all of our bills and trying to shave where we could. I had become a pretty serious couponer, and it was through one of those forums that I heard folks talking about Dave Ramsey and YNAB. I opted to try YNAB, and I have to admit that when I first downloaded it, it seemed too simple to be effective. I had used Managing Your Money for years, and I just didn't get the change in mindset. That said, by the end of the first 30 days I was hooked! For me it was all about the feeling of control that came with knowing just how we would make ends meet. Before long, we were saving and giving more than we ever had been able to do before. Life has thrown us many curves over the past 12 years, including the loss of our home and business in the Paradise Camp Fire, and we have relied on YNAB to guide us during some pretty turbulent times.
Some things that have worked for me:
1) Paring down the number of categories. I know this is a personal thing, and I'm pretty anal. I originally had a lot of them, but they really only created extra work with little benefit. For example, I started with breaking out household items from groceries. It was a nightmare to separate everything on the receipts for a category that I did not need to scrutinize. I probably still have more categories than some folks, but I have eliminated or consolidated a whole bunch over the years.
2) I also use an Income Next Month category, which IMHO is one of the most egregious loss of features in nYNAB. Although I understand the concept, the age of money means nothing to me when I budget.
3) I record all my purchases daily, either on my phone immediately or on the PC when I get home. Knowing exactly where I stand at all times is a part of that feeling of control that I mentioned earlier.
4) This is probably bordering on heresy, but I really do not give every dollar a job when I receive it. Until recently, I just left the extra in TBB, but I have compromised and now have a category I call the "BLOB--wherever needed" (until I come up with a better name 😄). I understand the psychological effect of priorities and trade-offs between categories, but once I cover my bills (including true expenses) and savings goal for the month, I really do not know what I'm going to spend the leftover dollars on; it could be a hobby, the grandkids, or replacing utility items lost in the fire. Moving money among categories takes more effort than pulling it from just one. It's really not so different from the "things I forgot to budget" category that some other YNABers use. As long as everything else is covered, I like the freedom of NOT assigning those extra dollars.
So that's my story. Sorry if all this cooped up time has led to TMI. I also like reading how others approach their budgets!
I had tried Mint, Microsoft Money, a couple of Linux options, before finding YNAB4. It clicked immediately as a program, though I did get mental whiplash for the couple of weeks it took me to really understand the Rules. That was back in 2013, and later I was one of the beta testers for nYNAB a.k.a. YNAB on the web and YNAB mobile. I migrated my history from YNAB4 when it was first offered, and it worked perfectly for me. After a few months of double entry between YNAB4 and YNAB on the web, I decided the web version was better. Especially when Toolkit came along and made it work the way it should, plus some nice bells and whistles.
Automating everything is important for me, so I use automatic bill pay for everything available and scheduled e-checks for everything else. Scheduled transactions in YNAB to track those, and Goals wherever they make sense bring my weekly workload down to the point where I can read and post here. 😉
As dakinemaui says, I use the rewards CC for almost all purchases, and have it set to automatically pay off the statement balance every month. Since I am buffered, I never have to worry about the big hit when the CC transfer takes place as it is already allocated. Some people say that PIF only means it if you pay to zero; I disagree. I tried that for a few months and found it messed up the balances and the automatic setting with the CC company. So now it is automated, there is never any fee or interest, and I get the cash back, and a little interest from the bank.
I started using YNAB in September 2013. I've always been a solid money manager; I was the one who begged my parents for a checking account when I was 13 because I was sick and tired of keeping track of cash allowance and I wanted a check card. I successfully budgeted by account for over 15 years, even at one point going so far as to open an account at a different bank to have my pay from a part-time job in college deposited, so that I could save all the income from that job for a summer program I was taking part in. I also did things like buying a VISA gift card with my Christmas budget so that I wouldn't run the risk of overspending my budget. I found YNAB because I was a broke grad student in a high COLA and I wanted to take a PT job that would be a better job but which would have fewer hours per week.
The lightbulb moment for me with YNAB came when I was setting up my very first budget. Because I was used to "sequester this, sequester that" I started setting aside the $5/wk I would need for gas. And I thought, "Oh I could get a BP gift card! And I can just load the $5 each week." And then something made me stop, and I went, "Wait. If I spend only the money on groceries that is in groceries, and only the money on bus passes that is set aside in bus passes, then at the end of the week, there will still be $5 in my account. And at the end of the next week, there will be $10 left in my account. Holy crap. I don't have to buy a gift card. If I follow the rest of the categories, the gas money will still be there when I need it."
Back in 2013, nobody had ever heard of Age of Money, which I used to be a bigger defender of and now, after 5 years, have come around to considering to be an absolute farce. Back then, you got buffered. I was able to buffer in 54 days. I found the info on the separation of accounts and categories, and found a great explanation of how your buffer could be buffered without your account holding the buffer, and I separated in my mind my checking and savings accounts for good. I closed all my sub accounts at Capital One 360, and by mid 2014 (might have been 2015 when I added the Cash account), I had switched to 4 primary accounts in YNAB, one for each type of tender. I called them "Checking, Credit, Cash, and Capital."
For me, Rule 2, Classic Rule 4, and separating purpose from location have been revolutionary. I know that somewhere in my accounts, there is money for thing X, as long as I planned for thing X. I know that if I own a car, I have to have money set aside to fix the thing on occasion. And importantly, once I've set aside my Rule 2 funds, the rest of the money is mine without having to worry I won't have the funds for a major issue when it arises. Those three things are at the core of YNABing, AFIAC. I also like the thinking that really, everything is Rule 1: everything comes down to giving money jobs, and that also, everything is savings. Some is super long term savings, some is very short term savings, but it's all savings.
Those people would be wrong. PIF means you can pay to zero at any moment in time. The smart fish just pays the statement balance when it's due.
then the separation of accounts thing happens naturally as a result of trusting yourself and the software, plus some amount of being hassled on the forum if you ever even mention that you think it's a good idea to match your savings account balances to your budget category balances...
😂🤣Man, it is such a freeing concept when you learn to decouple your budget from your accounts. It really pains me to read about Nick True and his disciples matching categories to savings accounts.
Move Light Sound Life I’m sorry to report that Patzer passed away last year. He is definitely missed.
I am very sorry to hear that as well. I always enjoyed his posts and was wondering why he has not posted in a while. He was definitely at the top as far as good advice goes.